Pound Sterling

Pound Struggles but Hits 21-Month High Versus Euro

Pound News: GBP Slips as BoE Bailey Cautious on Inflation Risks

The Pound is struggling for support on Monday but is holding near a 21-month high against the Euro.

Comments from Bank of England (BoE) Governor Andrew Bailey struck a cautious tone over when the central bank should interest rates, describing the situation as ‘febrile’ and that there are ‘risks both ways’ in inflation forecasts.

GBP exchange rates are also coming under pressure from reports that UK-EU talks on the Norther Ireland protocol may be stalling after UK Brexit minister Lord Frost asked for greater urgency in talks, and European Commission vice-president Maroš Šefčovič responded by calling for an end to ‘political posturing’.

Looking ahead, UK manufacturing and services PMI for November released tomorrow may weigh on Sterling, with a slowdown in activity expected in both sectors suggesting the UK’s economic recovery may be losing momentum.

Euro News: EUR Directionless as Covid-19 Surge Tightens Grip in Europe

The Euro continued to weaken today as fears grow over surging Covid-19 cases causing more lockdowns across Europe that could derail the bloc’s economic recovery.

After Austria went into lockdown, and restrictions in Belgium and the Netherlands triggered civil unrest, German Chancellor Angela Merkel called for tighter restrictions and described the situation as ‘worse than anything we’ve seen’.

Worse-than-expected Eurozone consumer confidence also dented EUR sentiment as November’s reading was at its lowest level in seven months.

Eurozone PMI data released on Tuesday morning look set to add to the Euro’s losses as forecasts point to service sector activity slowing for a fourth consecutive month and manufacturing for a fifth straight month.

US Dollar News: USD Soars as Biden Nominates Powell

The US Dollar strengthened across the board today and rose to a 16-month high against the Euro, underpinned by expectations for earlier monetary policy tightening from the Federal Reserve.

News that US President Joe Biden had decided to nominate Federal Reserve chair Jerome Powell for a second term, and Lael Brainard as vice-chair, have given the ‘Greenback’ a boost by ending uncertainty over who would lead the US central bank.

With a shorter trading week due to the Thanksgiving Holiday in the US, risk appetite, durable goods orders and the PCE index will all likely drive movement in USD exchange rates.

Canadian Dollar News: CAD Dented by Declining Oil Prices

The Canadian Dollar weakened through Monday’s session as WTI crude prices continued to decline to $75 a barrel, denting the oil-sensitive ‘Loonie’.

CAD exchange rates could continue coming under pressure as oil prices fall due to increased supply and potential for lower demand if more European countries go into lockdown.

Australian Dollar News: AUD Buoyant amid Risk-On Trade

The Australian Dollar made strong gains on Monday as market risk appetite improved to lift the risk-sensitive ‘Aussie’.

Australian manufacturing and services PMI data published tonight may provide additional support to AUD exchange rates as forecasts point to both sectors expanding.

Upcoming Data

Monday 22nd November

22:00 AU Manufacturing and Services PMI (Nov)

Tuesday 23rd November

09:00 EU Eurozone Manufacturing and Services PMIs (Nov)

09:30 UK Manufacturing and Services PMIs (Nov)